Market Commentary

Daily reports from our Chief Economic Strategist.

TRADE, THE ELECTION, GDP AND INTEREST RATES
Will November’s election become a market event? A survey of Bank America/Merrill Lynch’s institutional accounts indicated the uncertainty about the upcoming election is a bigger risk than trade.
DID MINNEAPOLIS FED PRESIDENT KASHKARI VALIDATE YESTERDAY’S REMARKS?
Minneapolis Fed President Neel Kashkari made comments that’s validated many of yesterday’s remarks stating hedge funds and “other investment vehicles” are the primary reasons for the illiquidity in the repo market. Kashkari further opined one of the greatest risks is
DID A BLOOMBERG ARTICLE VALIDATE MY VIEWS?
Many times, I have commented about liquidity issues and how it relates to the repo market. As widely discussed the Fed is intervening into the “plumbing of the markets” on a daily basis since
DATA WAS AGAIN STRONGER THAN EXPECTED
Will monetary policy assumptions soon change? Yesterday’s data continued to surprise on the upside. Retail sales, initial jobless claims, the Philadelphia Fed all painted a picture of strength.
INTEREST RATES AND ALGOS
Yesterday I commented about the massive outperformance of technology which started in earnest in 2016. According to Bloomberg the ten years of tech outperformance is the longest stretch in history with concentrations exceeding the manic 2000 apex.
EARNINGS AND FED PRESIDENT ROSENGREN
Fourth quarter earnings season is about to commence. According to Goldman, results are expected to increase by the smallest amount in three years, commenting further margin pressure may continue for the foreseeable future for a myriad of reasons.
JOBS, THE PHILLIPS CURVE AND ALGOS
December’s jobs data was nominally disappointing. In my view the biggest disappointment was wage growth which fell below 3% for the first time since July 2018. Based upon the Phillips Curve, wages should be rising with low unemployment.
INDEXING AND JOBS
Indexing the last five years has been a runaway success but has this success created market imbalances? Many are starting to opine valuations of the mega sized technology issues have created an environment conducive to increased volatility.
DID BRINKMANSHIP WIN AGAIN?
Did Iran back down? Did brinkmanship win again? Only history will answer this question. Perhaps the only certainty to write is the media/blogosphere is filled with official sounding but completely unsubstantiated reports.
ARE WE LIVING IN A COMPLACENT WORLD?
Equities fell nominally as some are wary of escalation in tensions with Iran. Oil also declined believing that such any escalation will not impact supplies. Treasuries were essentially unchanged.

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